Fit for the Times

by Lisa Haddican On Dec 22, 2008

With established subsidiaries in freight carrying for more than 20 years, the holding company, AirT Inc., decided to extend its industry reach to include GSE manufacturing and maintenance. Following a record-breaking fiscal year for 2008, AirT has continued to report impressive first- and second-quarter earnings for 2009 despite an industry downturn. Buoyed by the success of its ground support subsidiaries, AirT has found itself well positioned in the current industry climate.

“You try to keep the company moving to fit the times,” says George Prill, one of the founders and longtime director of AirT Inc. “You look at the market and you figure out how you are going to beat it.”

That philosophy has played a large role in the evolution of AirT, which was founded in 1974 as a freight carrier, operating feeder aircraft as the companies Mountain Air Cargo and CSA Air.

In 1997, AirT saw an opportunity to reach into the ground support industry as an equipment manufacturer and acquired Terex Aviation, a company that specialized in the manufacturing of a single line of deicing trucks.

“At that point in time, our main business was flying for FedEx — great and wonderful customer — but we wanted to see if we could broaden our revenue sources,” says Walter Clark, chairman and president of AirT Inc.

Operating as Global Ground Support, the company worked to expand its family of deicing products, developing 700- and 1200- and 3200-gallon models. The company has continued to develop its deicing technology, rolling out a premium onboard blending system, a forced-air system and an Extended Reach Deicer, the world’s tallest deicer to accommodate large aircraft, including the Airbus A380.

The company has also expanded its product focus to include manufacture of catering and cabin service trucks, lavatory trucks, tow tractors and decontamination systems.
In 1999, Global Ground moved beyond its commercial activities and entered into the military market with its first agreement with the U.S. Air Force to supply them with deicing equipment.

A Turn Toward Maintenance
A series of developments over the next years designated Global Ground as not only an equipment supplier but also a maintenance provider.

In 2002, Global Ground Support was part of the team that installed the IceWolf deicing system consisting of 12 booms at Philadelphia International Airport. As well as supplying the equipment, it provided the maintenance of the equipment and facility at the location.

Global opened a maintenance station at Washington Dulles International Airport airport in 2004, providing services for a deicing operator. “We took care of their entire deicing fleet, which consisted of various number of deicing equipment manufacturers,” says Rick Smith, CEO of Global Ground Support. “Basically, we were working on other competitors’ equipment and that evolved into providing other GSE maintenance services for other airlines at the airport.”

In 2005, the company opened up an additional station at Reno-Tahoe International Airport, providing about 80 percent of the third-party maintenance services. Seeing the increased success as a third-party maintenance provider, the company recognized a new opportunity to expand in the industry.

Following The Trend
Following the developments in the maintenance arena, those services were rolled into a new AirT subsidiary, Global Aviation Services.

The company was formed in August 2007, beginning with a $3.5 million contract with Northwest Airlines for GSE and facility maintenance.

GAS has since expanded to 16 shops, servicing more than 40 airports in North America. The company has grown as a comprehensive on-site maintenance service provider, offering equipment refurbishment, facility maintenance, passenger loading bridge maintenance and luggage conveyor maintenance.

“So really what we’ve done in the last year, we’ve taken that $3.5 million contract and 45 employees that got us in the business and today we’ve got contracts for $8 million worth of business and we’re right now at over 95 employees,” says Brad Osborn, vice president operations at Global Aviation Services.

Beating The Market
The success of its ground support subsidiaries has been reflected in AirT’s fiscal earnings reports. The holding company reported revenue in excess of $78 million for the fiscal year 2008 — the company’s best.

It went on to report earnings of $1.3 million in each of the first quarter and second quarters of 2009.

AirT’s freight carrying subsidiaries have recently experienced a lull in its activity. “The freight business with FedEx has been a steady business for us the last 25 years and continues to be steady albeit there are some pauses in growth, and I think we are going through a pause in the growth,” Clark says.

But the ground support subsidiaries have countered that pause in freight growth with lucrative contracts. For Global Ground Support, the steady U.S. Air Force business has resulted in substantial revenue, including a recent order in February for 44 mobile deicing trucks at a cost of $14.7 million.

“We are fortunate to be a supplier to the U.S. Air Force for their deicing truck needs,” Clark says. “That has been a steady source for us, even as the economy turns down for aviation.”

Along with the U.S. Air Force business, Global Ground secured two separate orders in August for its Extended Reach Deicers to be used at Heathrow Airport and John F. Kennedy International Airport for use on the A380.

On the maintenance side, the financial plight of the airlines has heightened an interest in third-party service providers. The industry trend has signaled further opportunity for Global Aviation Services, which added two of its service locations within the past few months.

“There is continued interest in our maintenance services, in fact, we have seen increased interest in outsourcing with the times that the industry is facing,” Osborn says. “We are in the market at a really good time, and we’re performing good quality work.”